In front of a Greek hotel, Rosemary Villanucci teases her neighbors, two sisters named Claudia and Frieda MacTeer. She tells them they can't get into her father's car, since she's white and they are black.
Claudia (the narrator) and Frieda go to the railroad tracks with their family to pick coal for Zick's Coal Company.
Claudia remembers getting sick once after picking coal; she recalls her mother taking care of her and Frieda singing to her. Although her mother yelled at her for vomiting on the floor, Claudia remembers feeling surrounded by love.
The MacTeers take on a boarder named Mr. Henry. Through gossip, we learn that he has never been married. Mr. Henry is immediately playful with Frieda and Claudia. He teases them and does a magic trick for them – presenting a penny then hiding it in his clothes for the girls to find.
In addition to Mr. Henry, the MacTeers also get another houseguest – young Pecola Breedlove. Pecola's father, Cholly, is in jail after recently trying to burn down the Breedloves' house and hitting Pecola's mother. Pecola's mother is staying with the woman she keeps house for. Her brother, Sammy, is staying with another family. Pecola is now homeless, which the narrator refers to as being "outdoors."
Frieda and Pecola bond over a mutual love of Shirley Temple. Claudia hates Shirley Temple. She recalls getting a white doll for Christmas one year and resenting it. Instead of loving her doll and mothering it, Claudia dismembered the doll in outrage. Pecola, on the other hand, loves Shirley Temple so much that she drinks milk out of the sisters' Shirley Temple saucer just to be able to gaze into Temple's face.
In one such creepy gaze-fest, Pecola drinks three quarts of the MacTeers' milk. Mrs. MacTeer gets mad, scolding the girls and sending them outside.
Once outside, blood begins to spill down Pecola's legs. Pecola and Claudia get scared, but Frieda knows that Pecola is getting her first period or, as she calls it, "ministratin.'" Frieda tries to attach a pad to Pecola's dress. Rosemary, spying from the bushes, yells to Mrs. MacTeer that the girls are up to something perverted. Mrs. MacTeer rushes out, sees Pecola's bloody legs, and takes her into the bathroom to clean her up.
That night, the three girls sleep next to one another. They talk about how Pecola can have a baby now. Frieda tells Pecola she can only have a baby if someone loves her. Pecola asks how to go about getting love. No one answers her.